Eventful day! The week started bullish across the board and it’s been a quite nervous trading day. A lot to digest: USDA WASDE is still in mind, Export Inspections, crop report, weather market… Only Corn managed to keep up (+8 cents) with very good export inspections and Informa decreasing acreage, while Wheat and Soybeans reverted to finish in red territory (respectively -3 and -6 cents). Funds bought 16,000 Corn, sold 10,000 Soybeans and 4,000 Wheat. Are funds on their way to be longer on Corn than they are on Soybeans? Another day like this and it would be pretty close… MATIF also erased the gains and closed a tick higher on the front month while the curve was down.
Night session is red across the board (Soybeans -11 cents, Corn and Wheat -5 cents), but also this could be a nervous day, US retails sales will probably give a last attempt to speculate around what will happen on the FOMC tomorrow. MATIF is down sharply also, failing to find support from a lower USD: currently trading -€1.5.
Corn planting are virtually done in the US. There was no major obvious shift from corn to soybeans but we’ll have to wait for the final acreages (good idea will be published on the 30th of June by the USDA), however, Informa actually cut 820k acres from corn and gave 761k acres more to soybeans. USDA let unchanged the corn acreage to 93.6M acres (91.77% being harvested) on the last WASDE report. Meanwhile, Informa estimated yesterday indeed the areas to 92.566M acres, actually decreasing by -0.88% their estimates. If they’re right, taking into account 168 bushels per acre and 91.77% of the surfaces harvested, this would mean a 362.49MT US crop, -4.05MT below USDA. But on the other side Informa increased by +0.92% its soybeans acreage estimates to 83.761M acres, above USDA. Indeed, USDA still got soybeans acreage pegged to 82.2M acres, with 99.03% being harvested at 46.7 bushels per acre. In other words, keeping yield and harvested percentage with Informa expectations, that would mean a crop of 106.46MT, +3.04MT above USDA. Meanwhile, soybeans are keeping being planted in the US, 9% last week, planting reached 92%, 7% in advance compared to last year and 5% in advance compared to the 5 year average. As per the winter wheat harvest, 9% of the winter wheat has been harvested last week, harvest completion reached 11%, 2% in front of last year but 7% behind the 5 year average.
There was a lot of talks about tornado and storms in the markets. Actually, it’s a calmer year than the average. There was also a lot of talks about the drought. There’s a bit of rain deficit in the south of the corn belt but the situation is not comparable to 2012 by any means. There’s decent rains forecast and temperatures are coming back around seasonal compliant values. Anyway, crop ratings we feared… An once again… No deal! Corn ratings are unchanged to 75% G/E ad 4% P/VP, better than last year (respectively 73% and 5%). Soybeans ratings even increased… They are classified G/E at 74% and P/VP at 4% (respectively 67% and 6% last year). Winter wheat is the only one taking a hit, 61% of G/E, -1% from last week, but once again, no comparison with last year (43% only), P/V are unchanged to 9% (22% last year). Finally, spring wheat ratings were unchanged to 75% of G/E and 2% of P/VP (70% and 4% last year). So crops are doing well and better than last year!
Export inspections were once again very good for corn, actually outstanding: 1.697MT! This is more than need, obviously taking into account the fact USDA raised exports to 43.36MT. Corn need to average 1,264.88kT weekly for the next 3 months. Wheat is starting the marketing year slowly, 364kT as 469kT is necessary per week. Finally, soybeans shipment were slow! Only 137kT were shipped, there’s a bit of seasonality and with spot demand shifting to the US this should increase! Now 353.8kT is needed every week. One can ask a question if all the export commitments are going to be honored because there’s a discrepancy between the behavior of export sales and export inspections…
Algeria’s OAIC is tendering for durum, mid-August to mid-September shipment. China auctioned 27,162T of wheat from states reserves, and 7,814T of corn (imported).
This is the ICE Brent’s turn to come back below $50. Oil is down and $50 is proving to be a very tough level. NYMEX Crude carries a $48 handle while ICE Brent is just below $50. Stronger dollar, guess what… Lower gold. Trading now just below $1,280. Still little movement on freight with Baltic Dry Index BADI printing -1 to 609.
EURUSD is lower this morning, might be a bit nervous until the FOMC, and most probably shortly after also! Currency of the day is the British Pound, just hammered as the year on year CPI was bad (+0.3% versus +0.4% expected) but mainly because Brexit is in the lead! George Osborne gave a very weird argument in Wales, saying that some company rely on exports: but with a collapsing pound, it would become even more competitive, right? So still a very messy economic campaign on both side, it’s very likely the deciding factor for British voter will be more ideology rather than macroeconomy. Meanwhile, with a bit more than one week to go, the campaign is pacing up and everyone doing the last chance plea: newspapers giving their side on front page, last one is The Sun supporting Brexit… Who’d have guess?!?